A Management Studies View
Chapter 2: The legal invention of the incorporated business
The chapter discusses corporate law as the principal legal device that regulates economic affairs within the realm of the incorporated business. The key mechanisms of corporate law are examined, and the historical conditions that resulted in specific legislation pertaining to the firm is discussed. One of the foremost consequences of a political view of corporate law is that shareholder primacy governance is separated from the efficiency-maximization claims advocated in mainstream corporate governance literature. The incorporated business is a legal species that was never intended to maximize efficiency, but to serve as a vehicle for enterprise, capital formation, and the production of goods and services, i.e., to make a substantial contribution to economic welfare. The last section discusses how European law and courts handle cases where the present legislation is put to the test of entrepreneurial activities.
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